GENFIT: Third Quarter 2020 Financial Information and Launch of
Renegotiation of Convertible Bond
- Cash and cash equivalents of €199.3 million as of
September 30, 2020
- Company proposes a partial buyback and an amendment of
the existing terms of the 2022 OCEANEs
Lille (France), Cambridge
(Massachusetts, United States), November 16, 2020
– GENFIT (Nasdaq and Euronext: GNFT) a late-stage
biopharmaceutical company dedicated to improving the lives of
patients with metabolic and chronic liver diseases, today announced
its cash position as of September 30, 2020 and revenues for the
first nine months of 20201, and proposes to 2022 OCEANEs holders a
partial buyback and an amendment of the existing terms.
Cash Position
As of September 30, 2020, the Company’s cash and
cash equivalents amounted to €199.3 million compared with €303.0
million one year earlier.
As of June 30, 2020, cash and cash equivalents
totaled €225.7 million.
Revenues2
Revenues for the first nine months of 2020
amounted to €350 thousand compared to €31 million for the same
period in 2019.
Revenues for the 3rd quarter resulted mainly
from services provided and revenues under the licensing and
collaboration agreements signed with Labcorp and Terns
Pharmaceuticals.
Recap
On September 30, 2020, GENFIT announced its plan
to reduce its cash burn by more than 50% by 2022 compared to the
cash burn prior to the RESOLVE-IT Phase 3 data.
GENFIT confirms its objective to reduce the
current cash burn rate from €110 million annually before our Phase
3 data, to approximately €45 million annually, beginning in 2022.
Due to the residual expenses related to the termination of
RESOLVE-IT and the workforce restructuring plan, 2021 will be a
transition year from a cash burn standpoint.
This plan incorporates the following key
components:
• The overall clinical
development program for elafibranor in NASH and all activities
associated with the commercial launch of elafibranor in NASH have
been terminated given the low probability of success compared to
required expenses. The termination includes the NASH combination
therapy trials, the pediatric trials, and other trials such as the
evaluation of the impact of elafibranor on liver fat
composition;
• A comprehensive
cost-saving plan has been implemented, including the redirection of
R&D activities and the termination of secondary programs such
as the RORgT program;
• A workforce
restructuring plan is underway to reduce the overall workforce by
40%, encompassing both the U.S and France in order to align the
company size to the new scope of activity. The Company expects the
plan to be completed by the end of the year.
Partial buyback and amendment of the
terms of the 2022 OCEANEs
Pascal Prigent, CEO of GENFIT,
commented: “The partial buyback and amendment of the terms of our
convertible bonds, the terms of which are described below, aim to
reduce by more than 50% the nominal amount of GENFIT’s financial
debt, and to defer the maturity date of the remainder until 2025.
We can allocate a maximum of €50 million to this transaction which
will help the company maximize its chances of success in the
interest of all stakeholders involved: the Company, its
shareholders and bondholders. I am confident that through a
constructive discussion with our bondholders we will find an
acceptable compromise which will put the Company in a good position
following the results of our Phase 3 PBC trial”.
Main terms of the October 2022 OCEANEs
In October 2017, GENFIT (the “Company”) issued
6,081,081 bonds convertible into new shares and/or exchangeable for
existing shares due on October 16, 2020 for a nominal amount of
€179,999,997.60 (“2022 OCEANEs”) by way of a private placement to
institutional investors.
The 2022 OCEANEs were issued at a nominal unit
value of €29.60 and bear interest at an annual nominal rate of
3.50%, payable semi-annually in arrears on April 16 and October 16
of each year.
The 2022 OCEANEs entitle their holders to
receive new and/or existing GENFIT shares at an initial
conversion/exchange ratio of one share per 2022 OCEANE.
The 2022 OCEANEs trade on Euronext Access™
(ISIN: FR0013286903).
Company objectives
Despite the Company’s significant cost savings
initiatives, the expected cash position on the maturity date of the
2022 OCEANEs will not allow the Company to repay the convertible
bonds at par. This represents a significant hurdle to the Company’s
development and the pursuit of its new strategy, with adverse
consequences in several areas: access to funding, signing of
commercial agreements or strategic partnerships.
Therefore, this situation represents a major
constraint for the Company and all the stakeholders: the 2022
OCEANE holders, shareholders, financial and commercial
partners.
The Company’s significant efforts to preserve
its cash must therefore be accompanied by an amendment of the terms
and conditions of the 2022 OCEANEs.
Natixis and Kepler Cheuvreux (the “Counsels”)
have been appointed by the Company to assist in this partial
buyback and the amendment of the terms of the 2022 OCEANEs.
The Company and its Counsels have prepared a
proposal encompassing a partial repurchase and an amendment of the
terms of the 2022 OCEANEs, with the objective of:
- preserving as much as possible the Company’s ability to finance
its operations;
- reducing the nominal amount of the financial debt to be
redeemed;
- deferring the maturity date of its convertible bonds in line
with the next milestones in the Company’s two main programs: the
ELATIVE™ Phase 3 clinical trial evaluating elafibranor in PBC and
the NIS4™ technology for (NASH) diagnosis; and
- maximizing the potential for value-creation for shareholders
and the 2022 OCEANE holders.
Proposal to the 2022 OCEANEs holders
In order to reach its objectives, the Company is
considering proceeding in two interdependent phases:
1)
Partial buyback of the 2022 OCEANEs
The Company is looking to reduce by more than
50% the nominal amount of the 2022 OCEANEs by repurchasing bonds
that will then be cancelled. Considering the current cash level and
the expected cash consumption over the coming years, the Company
has allocated a maximum of €50 million to this objective. This
envelope was determined to allow the continued operation of the
Company’s business until the ELATIVE™ Phase 3 clinical trial
evaluating elafibranor in PBC can be monetized.
All the repurchased 2022 OCEANEs will be bought
back at the same price.
Should the buyback requests from the 2022
OCEANEs holders exceed the €50 million maximum repurchase amount
contemplated by the Company, buyback requests will be reduced
proportionally to ensure equal treatment among all the holders.
2)
Amendment of the remaining portion (post partial buyback)
of the terms of the 2022 OCEANEs
In order to pursue its strategy and maximize
value creation for its shareholders and the 2022 OCEANEs holders,
the Company proposes to amend the 2022 OCEANEs terms as described
below:
- a 3-year deferral of the maturity date (until October 16, 2025)
which would reduce the financial pressure on the Company and give
it the flexibility to decide on the optimal strategy to monetize
results of the Phase 3 clinical trial ELATIVE™ evaluating
elafibranor in PBC: direct commercial development or through
partnerships, strategic alliances, etc.;
- a deferral of the start of the early redemption period3
provided for in the 2022 OCEANEs terms and conditions (until
November 3, 2023); and
- an increase of the conversion ratio of the 2022 OCEANEs to be
further determined, leading to an increased likelihood of
conversion of the remaining portion of the 2022 OCEANEs, ultimately
reinforcing the Company’s equity.
Implementation4
2022 OCEANE holders interested in the proposed
partial buyback are invited to contact the Company or its Counsels.
Retail holders should contact the 2022 OCEANE Bondholder
Representative (Représentant de la Masse) at
genfit@aetherfs.com
The Company will announce the definitive terms
of the partial buyback as well as the amendments to the 2022
OCEANEs terms and conditions (in particular, the repurchase price
offered for the 2022 OCEANEs and the contemplated conversion ratio)
in a subsequent communication.
The Company and the 2022 OCEANE holders will
then be able to enter into agreements relating to the 2022 OCEANE
buyback, which will remain contingent on and occur after the
following events:
- approval by the Extraordinary General Meeting of the Company’s
shareholders of the new conversion ratio; and
- approval by the 2022 OCEANE holders of the aforementioned
amendments.
As a final step, the Company will convene a
general meeting of the shareholders and a general meeting of the
2022 OCEANE holders, which are expected to be held in the first
quarter of 2021.
ABOUT GENFIT
GENFIT is a late-stage biopharmaceutical company
dedicated to improving the lives of patients with cholestatic and
metabolic chronic liver diseases. GENFIT is a pioneer in the field
of nuclear receptor-based drug discovery, with a rich history and
strong scientific heritage spanning more than two decades. GENFIT
is currently enrolling in a Phase 3 clinical trial evaluating
elafibranor in patients with primary biliary cholangitis (PBC). As
part of GENFIT’s comprehensive approach to clinical management of
patients with liver disease, the Company is also developing NIS4™,
a new, non-invasive blood-based diagnostic technology which could
enable easier identification of patients with at-risk NASH.
NIS4™ technology has been licensed to LabCorp in the U.S. and
Canada for the development and commercialization of a blood-based
molecular diagnostic test powered by NIS4™ technology. GENFIT has
facilities in Lille and Paris, France, and Cambridge, MA, USA.
GENFIT is a publicly traded company listed on the Nasdaq Global
Select Market and on compartment B of Euronext’s regulated market
in Paris (Nasdaq and Euronext: GNFT). www.genfit.com
FORWARD LOOKING STATEMENTS
This press release contains certain
forward-looking statements, including those within the meaning of
the Private Securities Litigation Reform Act of 1995, with respect
to GENFIT, including statements regarding our capacity to
renegotiate the terms of our 2022 OCEANEs convertible bonds, our
capacity to implement our restructuring plans, including a
workforce restructuring plan, the impact of the plans and
negotiations on our capacity to significatively reduce, in the
upcoming years, our operational expenses and our cash burn; in
particular in a context of uncertainty related to the COVID-19
pandemic that could significatively affect our revenues
projections, some operational expenses related to our clinical
trials, and consequently, our projected cash burn. The use of
certain words, including “believe,” “potential,” “expect” and
“will” and similar expressions, is intended to identify
forward-looking statements. Although the Company believes its
expectations are based on the current expectations and reasonable
assumptions of the Company’s management, these forward-looking
statements are subject to numerous known and unknown risks and
uncertainties, which could cause actual results to differ
materially from those expressed in, or implied or projected by, the
forward-looking statements. These risks and uncertainties include,
among other things, the uncertainties inherent in research and
development, including related to safety, biomarkers, progression
of, and results from, its ongoing and planned clinical trials,
review and approvals by regulatory authorities of its drug and
diagnostic candidates, exchange rate fluctuations and the Company’s
continued ability to raise capital to fund its development, as well
as those risks and uncertainties discussed or identified in the
Company’s public filings with the French Autorité des marchés
financiers (“AMF”), including those listed in Section 4 “Main Risks
and Uncertainties” of the Company’s 2019 Universal Registration
Document filed with the AMF on May 27, 2020 under n° D.20-0503,
which is available on GENFIT’s website (www.genfit.com) and on the
website of the AMF (www.amf-france.org) and public filings and
reports filed with the U.S. Securities and Exchange Commission
(“SEC”), including the Company’s 20-F dated May 27, 2020. In
addition, even if the Company’s results, performance, financial
condition and liquidity, and the development of the industry in
which it operates are consistent with such forward-looking
statements, they may not be predictive of results or developments
in future periods. These forward-looking statements speak
only as of the date of publication of this document. Other than as
required by applicable law, the Company does not undertake any
obligation to update or revise any forward-looking information or
statements, whether as a result of new information, future events
or otherwise.
CONTACT
GENFIT | Investors
Naomi EICHENBAUM – Investor Relations | Tel: +1
(617) 714 5252 | investors@genfit.com
PRESS RELATIONS | Media
Hélène LAVIN – Press relations | Tel: +333 2016
4000 | helene.lavin@genfit.com
GENFIT | 885 Avenue Eugène Avinée, 59120 Loos -
FRANCE | +333 2016 4000 | www.genfit.com
1 Unaudited financial information under IFRS2
Revenue recognized under IFRS 153 Early redemption event at the
Company’s option which may encourage the conversion of the OCEANEs
into shares in the event the Company's share price exceeds 150% of
the conversion price over a specified period.4 At this stage, the
renegotiation of the 2022 OCEANE terms remains in draft form.
- GENFIT: Third Quarter 2020 Financial Information and Launch of
Renegotiation of Convertible Bond